Paul Samuelson

I think it was called the Portfolio Management Index or publication, one of those journals.

And in there, Paul Samuelson – I believe that's his name – who actually worked in the Kennedy administration.

There was some buzz about active managers maybe not being as good as advertised.

And Paul Samuelson in there said, hey, can someone please launch an index fund so we can grade these active managers? and bogle who had just set up vanguard as a back office company it was not allowed to run money because of a situation with his old colleagues he was like wait why don't we do it and it's not running money because it's an index fund let's try it and that's how the idea was born more out of necessity really than any grand vision um so he launched it and i think the the real bold part was A, nobody had tried to actually put an index fund into action.

There were indexes, but not funds really.

There was one tiny attempt before, but long story short, it was really a new idea.

Uh, he didn't say it, but, uh, I think-

...

Paul Samuelson probably said it for, uh, first, but it's, it's, it's a very good idea.

[laughs]

Yes, I like that.

It's private equity investors, to be fair to them, would say, or private asset investors, to be fair to them, might say, well, look, public markets price all sorts of stuff.

As Paul Samuelson famously said, they've priced in nine of the last five recessions.

And in fact, Bob Schiller, won a Nobel Prize for pointing out that public equity markets move around far more than they should do on the basis of news.

So you could turn all this around, potentially.

My teachers encouraged me to avoid the University of Chicago because they thought it was too rigidly ideological and right.

So I ended up at MIT, and my teachers were people like Paul Samuelson and Robert Solow and Franco Modigliani and Peter Diamond and other people who have been honored for their accomplishments as economics researchers.

They were not Chicago free marketeers, but they were certainly neoliberals in the modern day sense of that word.

I mean, they believed in private property.

And partly because of that, Republicans are privately warning that their prospects in the midterms look increasingly dire.

So what now for Trump? Paul Krugman has a great new piece on his Substack arguing that Trump simply does not have the cards in the Iran situation, even though he may not know it.

So we're talking with Krugman about where all this is going.

Paul, always nice to have you on.

Good to be on again.

So Trump rejected that proposal from Iran to reopen the Strait of Hormuz, perhaps in part because it would not address Trump's demand for total termination of Iran's nuclear program, but The New York Times had an extraordinary detail about the Iranian offer.

Quote, "A US official also said that accepting it could appear to deny Mr. Trump a victory," close quote.

Paul, apparently that's the single most important factor in all of this, right?

You can learn more about us and see our work at www.econofact.org.

The Nobel laureate Paul Samuelson once wrote, I don't care who writes a nation's laws or crafts its advanced treaties if I can write its economics textbooks.

Samuelson did in fact write the best-selling economics textbook of the 1950s and 1960s.

Since the 1990s, his successor in textbook publishing is Greg Mankiw of Harvard University.

And this is something we're always making the point about.

Go all the way back, whether it's Paul Samuelson or Keynes or Pick your economist even more recently, even look at what Krugman was actually writing about trade.

There's nothing even especially controversial here in questioning some of the dogma of recent decades.

But then there's the orthodoxy of how economists interpret and define.